The Real Impact Of Data Breaches

Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Maja Milicevic, co-founder and principal at Sparrow Advisers.

Seemingly every few weeks news breaks of a new hacking scandal or high profile data breach. No industry is immune: Among the recently breached are a global hotel chain, a Q&A platform, fitness apps, global social platforms, big-box retailers and data companies that routinely handle vast amounts of sensitive, personal informationdata. There are likely many more that have yet to be uncovered.

Lukewarm responses to the breaches have also become quite common. It’s often difficult to quantify real-life impact and damage, especially since the types of data types compromised can vary. The legal and regulatory frameworks to ensure some accountability and punishment severely lag behind the complexity and prevalence of routine data collection and retention practices – and not just in marketing. With no enforcement, companies have little incentive to devote real resources to preemptive and ongoing data protection.

It’s not just limited to nefarious actors. Today’s data economy is generally opaque and doesn’t allow for visibility nor structured input and control from consumers. Data innocuously collected by a publisher today – while a reader researches a health condition, for example – can be repackaged, resold and surface years later as input into an important decision, such as whether to grant someone life insurance. This may sound like a nightmare scenario but it is unfortunately similar to what is already happening today.

There are several steps that marketing and advertising industry professionals can take to ensure we’re better custodians of our customers’ data.

The first step is understanding that security is everyone’s job. If marketers are tasked with collecting user-level data, they must understand what is being collected and how will it be stored. They must beef up on best practices, such as encryption, and know who legally and contractually has access to data coming from systems under their company’s control.

Marketers must perform a data audit to catalog and track all the different data points that they currently collect and ensure there’s a strategy that’s being followed whenever there’s desire to expand their available data universe. The temptation is to collect and store everything for as long as possible and figure out thewhat value of thethis data has along the way.

But is this really the best approach, especially if marketers are being asked to collect anonymized and PII-data sets together?

Next, we must design systems that allow for the enforcement of data rights usage and build in protections for end users. Easy opt-outs and good communication with end users on how their data will be used are critical to establishing and building user trust. Using data so it enhances the overall user experience, rather than over-personalizinge so it appears as if the user is being tracked or followed, is a fine line to draw, especially as the current state of data monetization may incentivize more intrusive methods.

Finally, a strong regulatory and legislative environment for punishing bad actors will ensure the right level of enforcement necessary, but that is almost entirely missing from the marketplace today. EU’s GDPR framework is an interesting first step in that direction, as is the California Consumer Privacy Act. We’re likely to see many more iterations and significant input from the industry in the regulatory process to ensure that we’re building a data ecosystem for everyone.

The ideal long-term solution lies with educating users on the value of exchanging data for services and putting them in charge of what data they share with whom and what they receive in return. To date, that value proposition hasn’t been clearly articulated, and consumers are seeing the negative side effects of lax data practices but very few, if any, positive ones. This needs to change rapidly if marketing as an industry is to continue earning consumer trust.

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1 Comment

  1. Marc Groman

    A thoughtful discussion of some of the aspects of digital marketing and advertising that need to change, not only to restore consumer trust, but to ensure that consumers continue to embrace the digital world with enthusiasm, be dazzled by innovative new products and services, and engage with digital advertising – not take herculean steps to avoid it.